Opinion – Vinicius Torres Freire: A chronicle of how the good Lula government began 1

“We will have to keep our many legitimate social anxieties under control so that they can be met at the right pace and at the right time”, said Luiz Inácio Lula da Silva, in his inauguration speech. From the first inauguration: January 2, 2003.

As in this 2022, in his victory speeches in 2002 and in his inaugural speech in 2003, Lula said: “If, at the end of my mandate, all Brazilians have the possibility of having breakfast, lunch and dinner, I will have fulfilled the mission of my life”.

About 150,000 people went to the Esplanada dos Ministérios to see the first left-wing president. Lula signed the term of office with a golden Montblanc pen, a gift from Ramez Tebet (1936-2006), senator for the MDB of Mato Grosso, then president of Congress, father of Senator Simone Tebet (MDB-MS).

The changes, Lula said in Congress, would not come from “voluntary outbursts”, but with “patience and perseverance”, “courage and care”.

His ministers of Finance (Antonio Palocci) and Social Security (Ricardo Berzoini) said that the government’s priority was the reform of Social Security, which was necessary to raise funds for social programs. A Central Bank autonomy project would soon be sent to Congress, the government said.

In early February, Lula defended the president of the Central Bank, Henrique Meirelles, from PT attacks. “The market is important and, therefore, the president of the BC represents a lot. My responsibility is great, we cannot fail.”

At the Treasury, the secretaries were Bernard Appy (executive secretary, today the formulator of the most serious tax reform), Marcos Lisboa (of Economic Policy, who would become a critic of PT administrations and director of Insper) and Joaquim Levy (at the Treasury, the liberal taken by Dilma Rousseff to the Treasury).

Geraldo Alckmin, one of the few toucans to go to Lula’s inauguration, said then that the PT should keep the presidency of the Chamber, for having elected more deputies, and that the opposition to the PT government “cannot be done in a systematic way”.

The primary surplus during Lula 1 averaged 2.4% of GDP per year (with the 2022 Transition PEC, the deficit could reach 2.2% of GDP. Primary result: revenue minus expenditure, disregarding expenditure with interest). The result was even more relevant because revenue was lower (average of 18.3% of GDP, compared to 19.5% now).

Net debt fell from 59.9% of GDP in December 2002 to 46.5% of GDP in December 2006, end of Lula 1, and to 38% in 2010, end of Lula 2. Now it is at 58.3 % (there is no official comparable gross debt data for this entire period).

The one-year interest rate on the market was 28.5% (13.5% real rate) when Lula took office; dropped to 12.4% at the end of 2006 (a real rate of 7.9%, almost the same as it is now). Throughout Lula 1 and 2, the trend was downward, resulting from spending control, public debt and inflation; putting an end, in practice, to the public external debt, a great achievement, and to declining interest rates in the world.

In the first month of the government, the “political team” had the idea of ​​removing the expenditure with “Zero Hunger” from the accounts of the fiscal result (of the target of the primary balance), changing the agreement with the IMF (Brazil still lived with a of power at the fund’s hospital). The Farm killed the idea in mid-January.

Between 2007 and 2010 (the last year of Lula 2), the average per capita income growth (measured per four years) was the highest recorded since redemocratization, in 1985. Poverty began to fall rapidly, more with economic growth than with social assistance. Poverty would be alleviated with Bolsa Família, which came later.